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Does Shipbuilding Industry Suffer Overcapacity?

  • Dianqing Xu
  • Ying Liu
Chapter

Abstract

  • Having failed to follow the cycles of global market and achieve expansion in the downturn, China’s shipbuilding industry suffers severe overcapacity. The capacity of collecting and analyzing economic data should be improved in the future to make better investment decisions.

  • The over pessimistic prediction of China’s shipbuilding industry is groundless. China’s shipbuilding industry enjoys the comparative advantages of large scale and cheap labor. Shipbuilding not only provides jobs, but also stimulates upstream and downstream industries (such as steel and machine building industries). After 3 years of slump, overcapacity of shipbuilding industry would be reduced as global economy recovers.

  • The shipbuilding market is oligopolistic in nature. When external market is in recession, enterprises have to hold on despite shot-term losses. Market share should not be given up easily, and short-term profit rate and capacity utilization rate don’t matter that much. Government should provide shipbuilders with financial and policy support. As long as market share is maintained, costs could be recouped and profit made as soon as the market rebounds.

  • Concentration of shipbuilding industry should be enhanced through merger and acquisition. By making full use of scale economy, China could promote division of labor and improve industrial structure.

  • Developing new products while maintaining traditional market shares, producing marine industrial equipment and high-tech ships like polar vessels, and promoting industrial upgrading, so as to strengthen competitiveness in the global market.

Copyright information

© Peking University Press and Springer Nature Singapore Pte Ltd. 2018

Authors and Affiliations

  • Dianqing Xu
    • 1
  • Ying Liu
    • 2
  1. 1.Huron University CollegeUniversity of Western OntarioTorontoCanada
  2. 2.School of StatisticsDongbei University of Finance and EconomicsDalianChina

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